CABINET minister Oliver Letwin has stood by the decision to give Kids Company £3million just days before it folded ahead of a damning report by MPs due out today into the Government's "cosy" relationship with the failed charity.

The Public Administration and Constitutional Affairs Committee (PACAC) report is expected to be highly critical of Government decisions to plough around £46m into Kids Company over several years, despite officials having major concerns about its financial management and what it was actually achieving.

But in a statement released by the Cabinet Office to coincide with the publication, Mr Letwin made no apology and insisted he still felt the supposed bail out had been the right thing to do.

He said: "As I said to the committee I believed it was the right thing to do to give this charity one last chance to restructure.

"We will of course pay careful attention to this report and in light of what we now know about Kids Company we will be reviewing our grant-giving process."

But Mr Letwin did confirm a Cabinet Office review in the wake of the Kids Company funding scandal would see tougher measures brought in around the funding of charities.

He said: "Charities across the country do important work transforming people's lives and strengthening communities, and they are well placed to deliver publicly funded services.

"By updating the process by which grants are awarded we will make sure the most stable, most effective charities receive taxpayer funds."

A Cabinet Office spokesperson said a review of how the department makes grants under section 70 of the Charities Act, which is considering the criteria used to assess risk and developing proposals for a more rigorous and probing approval process, was underway.

GETTY

Camilla Batmanghelidjh had the ear of the powerful including Prince Charles

Related articles

The spokesperson said: "The Grants Efficiency Programme is also undertaking a government-wide review of all existing practice in relation to direct grant awards.

"The evidence gathered will be used to make recommendations and develop guidance and best practice in relation to the award, monitoring, and evaluation of grant funding, in particular considering value for money and optimum funding levels."

The £3m handout came just weeks after Kids Company blew through an earlier larger grant of more than £4m, which had also been intended as the last payout before the charity came back for more.

During questioning by MPs in November, Mr Letwin admitted he agreed to hand Kids Company the £3m based on verbal assurances from the charity it had only an informal agreement with potential private doners to match fund it.

Mr Letwin, who overruled the advice of a senior civil servant NOT to hand over the money, said he did so after "being assured face to face" that a number of private individuals would collectively match the Government's sum.

GETTY

Kids Company declared itself insolvent just days after getting the last-chance bail out

But the committee heard Mr Letwin did not ensure the charity had actually received the match-funding, or any legal contracts were signed enforcing this, before handing over the cash.

Mr Letwin, who said he took full responsibility for handing over the money, also admitted he knew Kids Company and its flamboyant founder Camilla Batmanghelidjh wildly exaggerated by up to 24,000 individuals the amount of children and young people it helped to make itself look better to the public.

Labour MP Paul Flynn, PACAC committee member, said: "Ms Batmanghelidjh has repeatedly said that she was caring for 36,000 children.

"What is your judgment of how many she was caring for?"

Mr Letwin said: "I don’t know. I never believed the numbers that we were given on that.

"(Following the closure) I asked my officials to do intensive work with the local authorities in the three London boroughs and in Bristol (where Kids Company operated).

"It turned out that there were about 1,909 cases, if I remember correctly, of kids sufficiently vulnerable in the care of Kids Company in one way or another to be reviewed and taken over with the £200,000 grant I gave to the local authorities. That is one measure."

Related articles

We will of course pay careful attention to this report and in light of what we now know about Kids Company we will be reviewing our grant-giving process.

Oliver Letwin

He said Kids Company also worked on a less intensive basis with around 10,000 others, making les than 12,000 clients in total.

Committee chair, Tory MP Bernard Jenkin asked: "What should we make of a charity that so exaggerates its activity to the public?"

But Mr Letwin replied: "I think it is not unusual in the voluntary sector for charities to make the most of whatever numbers they get."

He said Kids Company had been known to pull in £17m-a-year of private funds, adding: "You do not raise that kind of money without being a salesperson.

"I think she conflated a whole series of different figures in order to get the biggest possible figure and to give an impression that went beyond what it looks like when you look at the detail."

During the November evidence session the committee revealed that there were long-held concerns within Government that Kids Company had no real way of measuring how succesful its work with vulnerable youngsters actuallt was.

A condition of the earlier £4.2m grant had been for Kids Company to begin measureing its outcomes, but it had failed to do that.

GETTY

David Cameron has avoided any serious questioning over his role in the scandal

Related articles

Despite the expected criticism, one member of the committee has already said it did not properly scrutinise Prime Minister David Cameron's role and his high-profile relationship with Ms Batmanghelidjh, who he used as the poster girl for his Big Society mantra after reportedly becoming mesmerised by her.

In an unusual move, Mr Flynn, accused fellow committee members of “political timidity” for not making Mr Cameron to give evidence.

An online poll of Express.co.uk readers asking if Mr Cameron should face questioning over Kids Company saw 97 per cent of people say that he should.

Out of 1,351 people who responded 75 per cent said he was "ultimately responsible" and should be properly questioned, 22 per cent felt he at least needed to explain to the public what he knew and when, while, just three per cent said he did not need to be questioned as Mr Cameron would have just beenong doing what he thought was best for the charity.

Mr Flynn said the committee should have heard responses from Mr Cameron about claims the Big Society link led to official concerns about the charity being ignored, and the millions of pounds of grants still being approved.

GETTY

Kids Company founder Camilla Batmanghelidjh with its chairman Alan Yentob

He said: "It was quite clear from the evidence that the support of the Prime Minister meant that despite misgivings from officials and other ministers, Ms Batmanghelidjh could not be refused.”

He said evidence to the committee revealed that if ministers appeared reluctant to approve grants to the charity then “Dear Dave” letters would be written by Ms Batmanghelidjh directly to the Prime Minister or his advisers and money would be paid regardless.

Ms Batmanghelidjh was even labelled a "confidence trickster" by Mr Flynn during the committee probe.

In a BBC documentary about the aftermath of the closure, due to be screened on Wednesday, she is also heard saying she was willing to slightly break the law if it benefited the children.

GETTY

Camilla Batmanghelidjh with artist Grayson Perry at a charity fundraiser

Tim Loughton, children’s minister from 2010 to 2012, told MPs one grant application refused by the Department for Education, “went over our head” after Ms Batmanghelidjh wrote a “Dear David” letter to Cameron.

He told the committee: “You have to ask No 10 as to why final approval went through, and it has been in the hands of the Cabinet Office after my time at the Department for Education.

"There was always a subplot of 'there is going to be terrible publicity on this, it’s not going to reflect well on the government and all these kids'.

"Kids Company would mesmerise people in positions of power to 'pay up or else'."

Mr Cameron has also never criticised or apologised over the payments.

He has previously said: "I always judged it was worth giving it one more go to try to get it to be financially viable.”

Kids Company and Ms Batmanghelidjh have repeatedly insisted there was no financial mismanagement and the charity was the victim of a political smear campaign.